Hypo Real Estate names new chief
Axel Wieandt, an executive at Germany's largest bank, Deutsche Bank, has been appointed to head the troubled lender.
Berlin -- Troubled German property lender Hypo Real Estate (HRE) named a new chief executive from rival Deutsche Bank on Tuesday evening, the same day that previous CEO Georg Funke resigned.
After a supervisory board meeting, HRE confirmed that Axel Wieandt, an executive at Germany's largest bank, Deutsche Bank, had been appointed to head the company.
The announcement came several hours after Munich-based HRE said Funke had resigned with immediate effect in the wake of a massive bail-out operation.
Georg Funke resigned with immediate effect, the banking group announced in Munich.
Wieandt, head of corporate development and strategy at Deutsche Bank, is a protégé of Deutsche Bank chief executive Josef Ackerman, one of Germany's most powerful bankers.
HRE was saved from going under by a state-led 50-billion-euro (68-billion-dollar) operation announced Sunday after a 35-billion-euro bail-out put together a week ago proved inadequate.
German Finance Minister Peer Steinbrueck said it was "unthinkable" to keep dealing with the financial institute's top management because the government and other banks involved in the rescue operation were not told earlier that HRE's problems were so grave.
He charged that HRE, at the same time as seeking state aid, had used lawyers against the government so as to "escape its responsibilities."
Funke, 53, had been in charge of HRE since it began operating in 2003 after it was split from HypoVereinsbank in order to concentrate on its core business of property lending.
Under his leadership, the company joined Germany's blue chip DAX index three years ago. Funke first came under fire at the beginning of the year when he unexpectedly disclosed heavy losses at the bank.
Prosecutors said Tuesday they were looking into whether there were any irregularities in the bank's trading practices which might have triggered its current plight.
The bank, which mainly lends to commercial projects and to build public facilities such as airports and roads, is the biggest German casualty of the credit crunch that has spread from New York in the last month.
HRE fell into crisis after its Dublin-based subsidiary Depfa ran out of cash. Its difficulties prompted Chancellor Angela Merkel to issue a pledge to guarantee all savings deposits in Germany.
HRE shares have lost nearly 80 percent of their value since it was forced to seek help from the government. On Tuesday, the share price rose a modest 4 per cent to 4.89 euros, following news that Funke had stepped down.